It’s not clear what happened with the Sega acquisition and whether Nadella ultimately approved talks. But in a Microsoft internal April 2021 merger review document, Sega was still listed as a key target. Microsoft had identified key areas for acquisitions in PC, mobile, and console across different markets, and Sega, Bungie, Zynga, and IO Interactive were part of a number of companies Microsoft was seriously looking at acquiring.
Microsoft and Sega have a long partnership with gaming going back to the original XBox days where they got a ton of exclusives originally meant for the Dreamcast after it died. This news is the least surprising to me. Hell, theirbl OG controller is literally the DC controller with an added stick and no VMU support.
It’s how we also ended up with stuff like PSO2 in the West after Sega abandoned it.